Compute the total amount to be invested

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Question - Net cost of investment - The Hill Top Company plans to open a new branch office wherein the company shall invest P900,000 in furnishings and equipment. Construction costs, lease deposits, and other initialization outlays are estimated at P1,200,000. Sales from this new branch are estimated at P9,000,000 a year. One-fourth of these sales will be in the form of accounts receivable at any given time. Cost of goods sold are estimated to be 75% of sales. The investment in merchandise inventory will amount to approximately P800,000 at any given time during the year. Cash of P220,000 will be needed to meet payments for operating expenses. Accounts payable and other current liabilities will increase by P650,000.

Required - Compute the total amount to be invested in the new branch for decision-making purposes.

Reference no: EM132754567

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